Slip Op. 06-26

UNITED STATES COURT OF INTERNATIONAL TRADE

____________________________________

:

OPTREX AMERICA, INC., :

:

Plaintiff, :

: Before: WALLACH, Judge

v. : Court No.: 00-08-00382

:

UNITED STATES, :

:

Defendant. :

____________________________________:

[Judgment for Defendant.]

Dated: February 27, 2006 

Sonnenberg & Anderson, (Steven Patrick Sonnenberg and Michael Jason Cunningham) for

Plaintiff Optrex America, Inc.

Peter D. Keisler, Assistant Attorney General; Barbara S. Williams, Attorney-in-Charge,

International Trade Field Office; Amy M. Rubin, Trial Attorney, Commercial Litigation Branch,

Civil Division, U.S. Department of Justice (Amy M. Rubin); and Beth C. Brotman, Office of

Assistant Chief Counsel, International Trade Litigation, for Defendant United States.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

FINDINGS OF FACT

1. The Court has jurisdiction over this action under 28 U.S.C. §1581(a).

2. Plaintiff, Optrex America, Inc. (“Optrex”), is the importer of record for the entries in

issue.

3. The administrative protests underlying this action were timely filed and all liquidated

duties and fees on the entries in issue have been paid.

4. The articles in issue were imported from Japan, Germany, China and Taiwan into the

United States through the Ports of Detroit, Chicago and Los Angeles in 1998 and 1999.

5. The imported merchandise consists of articles referred to generally as “liquid crystal

displays,” “liquid crystal devices” or “LCDs.”
1

 Currently, U.S. Customs and Border Protection.

2

6. The United States Customs Service (“Customs”)1 liquidated the merchandise under

various provisions, including subheading 8531.20.00, and subheading 9013.80.70,

Harmonized Tariff Schedule of the United States (“HTSUS”).

7. Following discovery, Defendant, the United States (“the Government”) amended its

answer to assert counterclaims under subheading 9013.80.70, subheading 9013.80.90,

and subheading 8537.10.90, HTSUS.

8. The LCDs in issue are high technology products that utilize liquid crystals that respond to

an electric field by twisting along their axes, thereby changing their optical qualities.

9. The LCDs in issue enable visual character displays, dot matrix displays and/or the display

of information through icons.

10. Each imported LCD has an indium tin oxide layer deposited and patterned on the glass.

11. Optrex presented evidence at trial with respect to three types of LCDs: LCD panels, LCD

modules and subassemblies that include an LCD module. The LCD modules in issue

include both graphic display modules and character display modules. 

12. All part numbers beginning with the prefix “DMC” describe character display modules.

13. The first three digits of a base part number beginning with “DMC” indicates the number

of characters and the number of character lines (e.g., DMC-40401NY-LY is a 40

character by 4 line character display module.) Thus, the following part numbers are all

LCD character display modules capable of displaying more than 80 characters at a time:

 

DMC-40401NY-LY, DMC-40457N, DMC-40457N-SEW-B, DMC-40457NYJ-LY-D,

DMC-40457NY-LY-B. 

The above five part numbers are subject to Defendant's first alternative counterclaim

under 9013.80.70, HTSUS. (Second Amended Answer in Court file.) All of the

remaining character display modules in issue display 80 or fewer characters.

14. All part numbers beginning with the prefix “AM” describe segmented character display

modules.

15. All part numbers beginning with the prefix “DMF” describe graphic display modules.
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16. All part numbers beginning with the prefixes “FRS,” “FSD,” "FSS,” “FTD,” “FTS,”

“GTD,” “NRD,” “NSD,” “NTD,” “NTX,” “VTD,” “VTS,” and “WSD” describe LCD

panels (sometimes referred to as glass sandwiches). All of the part numbers subject to the

Government's second alternative counterclaim are LCD panels. 

17. In their condition as imported, the LCDs can not display data or accept input.

18. Some of the imported LCDs are “distribution parts” or are “sold through distribution,”

which means that they are sold through stocking resellers of Optrex's products. These

distributors include Pioneer, Apollo, Digikey, Norvell and Sager. Optrex does not always

know the ultimate customer for distribution parts.

19. For some of Optrex’s products, according to Allen Houck, Optrex’s witness, “[a] custom

product in Optrex terminology is a product that we do some design, some modification to

another product to fit that customer's end application. So we may have another product

that's similar that we maybe make some modifications to tailor it directly to their

application.” 

20. The drawings and specifications produced by Optrex for its LCDs do not specify a

particular end use application.

21. Most of Optrex’s “standard” products were originally developed as custom products for

particular customers.

22. The “ground-up” custom LCDs in issue that were later sold to other customers are not

limited, by design, to a single end use application.

FINDINGS RE: CUSTOM LCDs AND/OR LCDs SOLD TO A SINGLE CUSTOMER

DURING THE TIME PERIOD IN ISSUE

23. AM-50090H-3-(N) is a character display module used in Motorola PCS cell phones. 

24. AM-50702HU-T-3 is a character display module with 11 characters of 7 segments each

plus icons used in Delco Electronics automotive trip odometers. This module has an

alternative (Delco) part number - 16227389.

25. AM-50885HU-LA is a character display module with 11 characters of 7 segments each

plus icons used in Delco Electronics automotive trip odometers.

26. DMC-16230NYU-LY-25 is a 16 character by 2 line character display module used in

Wayne Systems credit card scanners for gas pumps.

27. DMC-16249N-SEB is a 16 character by 2 line character display module used in Federal
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Express handheld terminals.

28. DMC-50037N-B-7, DMC-50037N-B-5 and DMC-50037N-B-6 are 40 character by 2 line

character display modules used in Avaya/Lucent desktop phones.

29. DMC-50042-1 is a 16 character by 1 line character display module containing printed

circuit contacts used in Data South dot matrix or ink jet printers. The printed circuit

contacts are used to control certain printer functions.

30. DMC-50461 is a 20 character by 4 line character display module with three indicator light

emitting diodes and printed circuit contacts used in Lexmark laser printers. The printed

circuit contacts are used to control certain printer functions.

31. DMC-50777N-AAE, DMC-50777N-B, and DMC-50777N-B-F40 are 16 character by 2

line character display modules containing printed circuit contacts used in Lexmark laser

printers. The printed circuit contacts are used to control certain printer functions.

32. Allen Houck testified that Part Nos. DMC-50461, DMC-50777N-AAE, DMC-50777N-B,

DMC-50777N-B-F40 and DMC-50042-1 are substantially similar to the articles

described in NY Ruling NY 816263.

33. Although the firmware on a particular printer which incorporates Optrex LCDs can be

changed or upgraded, it would be changed or upgraded by an engineer or the

manufacturer. In addition, with respect to the printers about which Optrex presented

testimony, printing a test page executes a fixed program that already resides in the printer. 

In other words, in printing a test page, the user is selecting a function that is already built

in to the printer.

34. DMC-50293H-LA is an 8 character by 2 line character display module used in Motorola

PCS mobile phones.

35. DMC-50387NYL-LY-B is a 20 character by 2 line character display module with a

micro-controller on board used in IBM point of sale displays.

36. DMC-50513N-LY-B-1-F40 is a 24 character by 2 line character display module used in

Avaya desktop phones.

37. DMC-50553NJL-SLY-10 and DMC-50553NJL-SLY-11 are 12 character by 4 line

character display modules with icons used in Motorola Iden cell phones.

38. DMC-50593NFJ-SLY-2 is a 12 character by 3 line character display module with icons

used in a Lucent cell phone.
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39. DMC-50684NJ-SLY-3 is a 12 character by 2 line character display module with icons

used in Motorola PCS cell phones.

40. DMC-50739-FW-1 is a 40 character by 2 line character display module with icons used in

Xerox copiers.

41. DMC-50799NYU-SLY-B is a 16 character by 4 line character display module with

printed circuit contacts used in Compaq file servers.

42. DMC-50799NYU-SLY-B-COM is a subassembly used in a Compaq file server that

incorporates character display module DMC-50799NYU-SLY-B and contains printed

circuit contacts and a rubber keypad with popple dome switches. The popple dome

switches are not used to control the server or input information to the server.

43. DMC-50877NY-B is a 20 character by 2 line character display module with a built in

microcontroller containing firmware used in NCR point of sale terminals. The user of the

point of sale terminal cannot change or amend the functions of that device and any

change to the firmware would typically be made by NCR. 

44. DMC-50922NFJ-SLY-2 is a 12 character by 4 line character display module with icons

used in Qualcomm cell phones.

45. DMC-50968N-B-1-F38 is a 16 character by 2 line character display module used in

Avaya desktop phones.

46. DMC-50980NFJL-SLY is a 12 character by 4 line character display module with icons

and popple dome switches used in Motorola Iden cell phones. The popple dome switches

control the mode and menu selections.

47. DMC-51039NFJ-SLY is a 12 character by 4 line character display module with icons

used in Qualcom cell phones.

48. DMF-50020NFU-FW is a 240 by 128 pixel graphic display module with printed circuit

contacts used in Pitney Bowes scales.

49. DMF-50020NFU-FW-1 is a subassembly containing module DMF-50020NFU-FW as

well as a rubber keypad with carbon pills used in Pitney Bowes scales.

50. DMF-50073NF-FW is a graphic display module supplied with an attached touch screen

used in a Xerox document center. This part is subject to Defendant's third alternative

counterclaim under 8537.10.90.

51. DMF-50082NY-SEW is a 320 x 40 pixel graphic display module used in SPX
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Corporation hand held testing monitors.

52. DMF-50088NBU-FW is a 640 x 200 pixel graphic display module used in Micros

Systems restaurant point of sale terminals.

53. DMF-50190N is a 128 x 64 pixel graphic display module used in Fisher

Rosemont/Emerson flow meters.

54. DMF-50246NB-FW-3 is a 352 x 35 pixel graphic display module used in IPC/Global

Crossings stock market turrets.

55. DMF-50247NB-FW is a 640 x 480 pixel graphic display module used in Micros Systems

restaurant point of sale terminals.

56. DMF-50260NFU-FW-23 is a 640 x 480 pixel graphic display module used in Hewlett

Packard medical equipment such as heart monitors. Hewlett Packard may have allowed

Optrex to show and sell the same display to other customers, including Datascope.

57. DMF-50260NFU-FW-31 is a 640 x 480 pixel graphic display module used in Hewlett

Packard/Agilent medical equipment such as heart monitors.

58. DMF-50260NF-FW-32 is a 640 x 480 pixel graphic display module used in Hewlett

Packard medical equipment such as heart monitors.

59. There is nothing in the design of the LCDs that are used in Hewlett Packard medical

monitors that limits the LCDs from being used only in those end use applications.

60. DMF-50331N-SLY is a 105 x 64 pixel graphic display module used by Primus in GTE

airplane telephones.

61. DMF-50375N-SEW is a 120 x 64 pixel graphic display module used in Symbol

Technologies hand held inventory scanners.

62. DMF-50386N-SLY is a 105 x 64 pixel graphic display module used in Primus airplane

telephones.

63. DMF-50521NBU-FW is a 240 x 64 pixel graphic display module used in Wayne Systems

credit card scanners on gas pumps.

64. DMF-50531NF-FW is a 320 x 240 pixel graphic display module used by Crestron

Electronics in a touch screen terminal for its Smart Touch radio frequency wireless

control system. This module is not imported with a touch screen.
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65. DMF-50562NFU-FW is a 640 x 320 pixel graphic display module used in Hewlett

Packard/Philips/Agilent medical monitoring equipment.

66. DMF-50573NB-FW is a 480 x 80 pixel graphic display module used in IPC/Global

Crossings stock market turrets.

67. DMF-50646NFJ-SLY-1 is a 96 x 32 pixels graphic display module with icons, printed

circuit contacts and a hall effect sensor used in Motorola PCS cell phones.

68. DMF-50656NY-T is a graphic display module with two 119 x 16 pixel sections plus

icons used in a Motorola pager.

69. DMF-50772NCWJU-FW is a 240 x 128 pixel color graphic display module used in

Garmin International aviation GPS devices.

70. DMF-50796H-LAR is a 45 x 28 pixel graphic display module used in Delco Electronics

automotive message centers.

71. DMF-50824N-SLY and DMF-50824N-SLY-2 are 240 x 128 pixel graphic display

modules used in Hewlett Packard external defibrillators. Allen Houck was unable to

identify the differences between these two modules.

72. DMF-50831NJ is a 265 x 65 pixel graphic display module with printed circuit contacts

used in Square D remote power switching systems.

73. DMF-50886NF-FW is a 640 x 200 pixel graphic display module used in Psion Teklogix

vehicle mount terminals.

74. DMF-50897NFJ-SEB is a 192 x 272 pixel graphic display module containing a touch

screen used in Motorola PCS cell phones. Any module with the base number 50897

would contain a touch screen.

75. DMF-50988NF-SLY is a 128 x 32 pixel graphic display module used in Sims Deltec

infusion pumps.

76. DMF-50995N-1 is a 240 x 112 pixel graphic display module with printed circuit contacts

used in Avaya Communications business telephones. The design of the LCDs that are

used in Avaya telephones does not limit their use only to that end use.

77. DMF-50998NFJL-SLY-1 and DMF-50998NFJL-SLY-3 are 96 x 48 pixel graphic display

modules with icons used in Motorola Iden cell phones.

78. DMF-51070NFJ-SLY and DMF-51070NFJ-SLY-AC are 96 x 32 pixel graphic display
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modules with icons, a hall effect sensor and either popple dome switches or printed

circuit contacts used in Motorola PCS cell phones. The popple dome switches and

printed circuit contacts would be under the keypad and would control the operations of

the cell phone.

79. DMF-51097NFJL-SLY DMF-51097NFJL-LY-AC, and DMF-51097NFJL-SLY-AD are

96 x 48 pixel graphic display modules with icons used in Motorola Iden cell phones.

80. F-51159NYJ-SEW-AA is a 120 x 64 pixel graphic display module used in Symbol

Technologies hand-held scanners.

81. FRD-11555AAH is an LCD panel with 9 seven-segment characters plus icons used in

Landis & Gyr/Siemens test equipment.

82. FRD-14181ABH-CD is an LCD panel with 3 fourteen-segment characters, 6 sevensegment characters and icons used in Landis & Gyr/Siemens voltage measuring meters.

83. FRS-10813AB and FRS-10813AB-CD are LCD panels with 5 seven-segment characters

used by Red Lion Controls.

84. FRS-12280AC-CD is an LCD panel with 7 seven-segment characters and icons used in

NCR scales.

85. FRS-13810AAPH-CD is an LCD panel with 3 seven-segment characters and icons used

in Johnson Controls temperature-humidity sensing instrumentation products.

86. FSD-15130AAPH-CU is an LCD panel with 8 fourteen-segment characters and icons

used in Matsushita Communications car audio systems.

87. FSD-15205AAF-CDA is an LCD panel with an attached flex cable, 8 seven-segment

characters on 2 lines (total of 16 seven-segment characters) and icons used in Infinity

Informatica Inc. cell phones.

88. FSD-15740AAH-CU is an LCD panel with 3 seven-segment characters, 1 two-segment

character and icons used in Lowrance digital depth monitors. 

89. FSD-16455AGPH-CU is an LCD panel with 10 seven-segment characters and icons used

in Visteon trip odometers. This panel has an alternate (Visteon) part number - F8FF10D922AB.

90. FTD-11501AGFH and FTD-11501ACFH are different revision levels of the same LCD

panel that has 4 seven-segment characters and icons and they are used in Visteon

Corporation automotive message centers. This panel has an alternate (Visteon) part
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number - F6RF-10D922-BB.

91. FTD-12613ABH-CU is an LCD panel with 8 fourteen-segment characters and icons used

in Visteon car audio systems. This panel has an alternate (Visteon) part number - F5RF18B955BC.

92. FTD-13069AAPH-CU is an LCD panel with 4 seven-segment characters and icons used

in Matsushita Communications car audio systems

93. FTD-13180AGH is an LCD panel used in Visteon automotive audio systems. This panel

has an alternate (Visteon) part number - 95GP-18B55-AC.

94. FTD-13201AEFH-CUA is an LCD panel with 10 seven-segment characters, icons, and a

transflective color filter used in Visteon odometer/message centers. This panel has an

alternate (Visteon) part number - F5RF-10D922-AB.

95. FTD-13366ABPH-CU is an LCD panel with 3 seven-segment characters, 1 two-segment

character and icons used in Delco car audio systems. This panel has an alternate (Delco)

part number - 16197564.

96. FTD-14021ACPH-CU is an LCD panel with 4 seven-segment characters, 1 two-segment

character and icons used in Matsushita Communications/Panasonic car audio systems. 

97. FTD-14171ABPH-CU is an LCD panel with 4 seven-segment characters, 1 two-segment

character and icons used in Delco car audio systems. This panel has an alternate (Delco)

part number - 16210571.

98. FTD-15286AAPH is an LCD panel with 3 seven-segment characters and icons used in

Delco automotive message centers. This part has an alternate (Delco) part number -

16235274.

99. FTD-15491AAPH-CU is an LCD panel with 4 seven-segment characters, 1 two-segment

character and icons used in Panasonic car audio systems.

100. FTD-15664 is an LCD panel with 9 characters of varying numbers of segments plus icons

used in Delco car audio systems. This panel has an alternate (Delco) part number -

16232895.

101. FTD-15979ABPH is an LCD panel with icons used in Visteon automotive message

centers. This part has an alternate (Visteon) part number - 98BP-10D922-BB

102. FTD-16420ACD-CD is an LCD panel with a graphic area of 80 x 7 pixels, 4 sevensegment characters and icons used in Motorola pagers.
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103. FTD-16455AAPH is an LCD panel with 10 seven-segment characters and icons used in

Visteon automotive trip odometers. This panel has an alternate (Visteon) part number -

F8FF-10D922-AA.

104. FTD-16766ABPH is an LCD panel with 6 seven-segment characters, icons and a color

filter used in Visteon automotive trip odometers. This panel has an alternate (Visteon)

part number - F8FF-10D922-BD.

105. FTD-17029AAPH is an LCD panel with 10 seven-segment characters and a color filter

used in a Visteon/Ford Electronics combination automotive clock and odometer. This

panel has an alternate (Visteon) part number - 98-BP-10D922-AC. 

106. FTS-10813AA is an LCD panel with 5 seven-segment characters used by Red Lion

Controls.

107. GMF-51048NFJ is an graphic display module used in the Home Wireless Networks

portable telephone handset portion of a house wireless network system.

108. GMF-51076N-S is an 95 x 7 pixel chip on glass graphic display module with a flexible

cable and icons used in American Telecom pagers.

109. IM-50888NF and IM-50888NF-1 are character display modules with 12 fourteen-segment

characters used in Hewlett Packard/Agilent measurement and test equipment.

110. NSD-12766AAD-CL is a 320 x 200 pixel LCD panel used in Lowrance Electronics fish

finders. Nothing in the design of the LCDs used only in Lowrance fish finders limits the

LCDs to that end use application.

111. NSD-14379AA is a 64x128 pixel graphic LCD glass panel with icons used in Telxon

Corporation hand held inventory scanners.

112. NSD-15129AAD-CL is a 160 x 160 pixel LCD panel used in a Lowrance Electronics

handheld marine global positioning system (“GPS”) navigational device.

113. NSD-15319AB is an LCD panel that was sold to Ultratec, Inc. for TTY cellular

telephones.

114. NSD-15334AAD-CL is a 65 x 100 pixel LCD panel used in a Lowrance Electronics

handheld GPS navigational device.

115. NSD-15920AAD-CL and NSD-15920ABD-CL are 160 x 160 pixel LCD panels used in

Lowrance fish finders.
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116. NSD-15921ABD-CL is a 240 x 240 pixel LCD panel used in Lowrance fish finders.

117. NSD-16595AED-CL is a 160 x 160 pixel LCD panel used in a Garmin fish finder. 

Nothing in the design of the LCDs used only in Garmin fish finders limits the LCDs to

that end use application.

118. NSD-16598AAD is a 64 x 128 pixel LCD panel used in Lowrance fish finders.

119. NSD-16853AAD-CL is a 104 x160 pixel LCD panel used in Lowrance handheld GPS

navigational devices. 

120. NSD-16948ACD-CL is a 240 x 240 pixel LCD panel used in Garmin fish finders.

121. NSD-17010ABD-CD is an LCD panel with 60 x 28 pixels configured into 12 character x

4 lines plus icons used in Metro Electronics cell phones.

122. NSD-17024ABD-CL is a 320 x 200 pixel LCD panel used in Lowrance fish finders.

123. NSD-17403ABD-CL is a 64 x 128 pixel LCD panel used in Techsonic fish finders.

124. NSD-7399CXD-CD is a 128 x 112 pixel LCD panel used in Ametek construction

machinery information centers.

125. NSD-7551 and NSD-7551AGD-CD are 128 x 128 pixel LCD panels used in Telxon

microprocessor-driven hand held inventory terminals.

126. NTD-13787AXD-CL is an LCD panel with two 119 x 16 pixel graphic display areas and

icons used in Motorola pagers.

127. NTD-15504AEHD-PCU is a 240 x 80 pixel LCD panel used in Garmin aviation

transponders.

128. NTD-16210AB is an LCD panel with two 119 x 16 pixel graphic display areas,

holographic filters and icons used in Motorola pagers.

129. NTX-15505AGH-QCD and NTD-15504AEHD-PCU are LCD panels which are

individual cells of a double super twisted nematic display used in Garmin aviation GPS

devices. NTX-15505AGH-QCD is a “dummy” cell and NTD-15504AEHD-PCU is an

“active” cell.

130. VTS-8A80BGFHJ-CU is an LCD panel with icons used in Visteon automotive message

centers. This panel has an alternate (Visteon) part number - F0OF-10D922-AA.
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131. WSD-14219AIPH-CU is an LCD panel with 6 seven-segment characters and icons used

in Yazaki automotive trip odometers.

132. WSD-14282BGPH-CU is an LCD panel with 6 seven-segment characters and icons used

in Denso Tennessee automotive trip odometers. This panel has an alternate (Denso) part

number - TN461000-1280.

133. WSD-14282BAPH is an LCD panel with 6 seven-segment characters and icons used in

Nippon Denso Tennessee automotive trip odometers. This part is a different revision

level with a minor design change from WSD-14282BGPH-CU. This panel has an

alternate (Denso) part number - TN461000-1190.

134. WSD-15550ABPH-CU is an LCD panel with 6 seven-segment characters and icons used

in American Yazaki automotive trip odometers.

135. WSD-16071AAPH-CU is an LCD panel with icons used in Nippon Denso automotive

thermometers. This panel has an alternate (Nippon Denso) part number - TN 461000-

1450.

136. WSD-16770ACPZ-CD is an LCD panel with 6 seven-segment characters used in Delco

Electronics odometers for Harley Davidson. This panel has an alternate (Delco) part

number - 16242996.

137. WSD-17304ACPZD is an LCD panel with 11 dot matrix characters and icons used in

Delphi automotive audio equipment.

138. DMC-24227N-B-24-F38, DMC-24227N-B-24-F38(I) and DMC-24227N-B-24-T are 24

character by 2 line character display modules. Although these particular modules are

used in Avaya desktop telephones, all of the “24227” modules are very similar.

139. DMF-50036NF-FW is a 640 x 200 pixel graphic display module sold to Spectra

Electronics, which repairs test equipment.

140. DMF-50036NF-FW-4 is a 640 x 200 pixel graphic display. Although no customers

appeared on the shipped order detail for this part in plaintiff's Exhibit 1, Allen Houck

testified that, to his knowledge, it was only sold to Toledo Scale, a company that makes

scales. However, the base part, 50036, is sold through distribution. Also, the “dash-4”

suffix indicates the addition of a Mitsumi connector, but such an addition would not

cause this module to be dedicated for use in a scale.

141. DMF-50036NFU-FW-4 is a 640 x 200 pixel graphic display module sold to Toledo

Scales. The “-4” version is “essentially the same as the base part number except it has a
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different type connector.”

142. DMF-5005NYJ-SLY-28 is a 240 x 64 pixel graphic display module. This module was

sold through distribution and was used by Daniel Instruments for an industrial

application. Allen Houck testified that he did not know if this module was sold only to

Daniel Instruments.

143. DMF-50260NY-SFW is a 640 x 480 pixel graphic display module. This module was

sold to Apollo Display which then sold it to Elite Entry Phone Company.

FINDINGS RE: LCDs ORIGINALLY DEVELOPED FOR A PARTICULAR

CUSTOMER IDENTIFIED AT TRIAL BUT ULTIMATELY SOLD TO OTHERS

144. DMC-50070N-B-2 is a character display module. Although it was a custom module used

in Avaya/Lucent desktop phones, it was also sold to General Dynamics.

145. DMF-5005NF-SEW is a 240 x 64 pixel graphic display module. Although the original

customer for this module was Datascope, which is a medical monitoring equipment

company, it is sold through distribution.

146. DMF-50260NF-FW-15 is a 640 x 480 pixel graphic display module. Although this

module was designed in conjunction with Hewlett Packard (“HP”), it would not work in

HP's medical monitors and was eventually sold to many other customers. 

147. DMF-50834NFJ-SEB is a 119 x 73 pixel graphic display module. Although the original

design of this module was created for Symbol Technologies, it was also sold to Hand

Held Products. These modules are used in hand held inventory scanners. 

148. DMF-651ANB-FW-14 is a 640 x 200 pixel graphic display module. The original

customer for this part was Datascope, which makes medical monitoring equipment. 

Allen Houck testified that there were some distribution parts in the “DMF-651 series” but

did not know whether the “dash-14” version was one of them.

149. DMF-50174NFL-SFW-11 is a 320 x 240 pixel transflexive graphic display module. 

Although this module was originally intended to be used in Garmin GPS devices, it has

been sold to several customers as well as through distribution and could be used for

multiple applications. All of the modules with part numbers containing “50174” are

“basically the same” and the differences with the modules discussed at trial involved such

characteristics as the cable length and the background color.

FINDINGS RE: LCDs THAT ARE SOLD THROUGH DISTRIBUTION AND/OR TO

MULTIPLE CUSTOMERS
14

150. DMF-50840NB-FW-AK is a 320 x 240 graphic display module that was sold through

distribution to Pioneer Standard which, in turn, sold it to a company called Checkmate. 

Checkmate makes credit card reader terminals. This module has a black bezel which was

added at Checkmate's request. Allen Houck does not know whether Pioneer Standard

sold this module to customers other than Checkmate but he did state that it is not limited

by design for use only in a touch screen terminal.

151. DMF-50840NB-FW is essentially identical to DMF-50840NB-FW-AK except that this

module has a silver bezel. This module is sold to multiple customers, including

Checkmate and Autotote. According to Allen Houck, “Autotote's product is, in a way, it's

a POS system. They do -- they do the -- not the gambling machines themselves, but they

do the register system where somebody's going to go trade in their chips or they are the

gambling machines at the horse tracks, those types of products are what they do.”

152. DMF-50262NF-FW-ME is a 640 x 400 pixel graphic display module. Although this

module was co-developed with Marquette Electronics for medical monitors, it was sold to

Marquette through a distributor, Pioneer Standard. There is nothing about the specific

design that limits this module to being used only in medical monitors.

153. DMC-24227N-SEW-B-11 is a 24 characters by 2 line character display module sold

through distribution. Although this module may be used in Lucent business telephones, it

has no physical characteristics that would commit it to that use and may be used in other

applications.

154. DMC-24227N-B is a 24 characters by 2 line character display module sold through

distribution.

155. DMC-50747NF is a 16 character by 2 line character display module with a mounted

controller chip sold through distribution to multiple customers.

156. DMF-5001NF, DMF-5001NY-LY and DMF-5003NB-FW are 160 x128 pixel graphic

display modules sold through distribution.

157. DMF-50036NFU-FW is a 640 x 200 pixel graphic display module sold through

distribution to multiple customers. One of the customers is Remanco, which uses the

module for a restaurant point of sale (POS) terminal. According to Allen Houck, “some

sort of microprocessor” would be required to operate this display.

158. DMF-50036ZNBU-FW is a 640 x 200 pixel graphic display module that was sold to

Nautilus, which makes exercise equipment, and also sold through distribution. 

159. DMF-50036ZNFU-FW is a 640 x 200 pixel graphic display module sold through

distribution. One of the applications is Drason-Stadler clinical audiometers.
15

160. DMF-5005N-EW is a 240 x 64 pixel graphic display module used by Agilent/Hewlett

Packard for medical monitors and also sold through distribution.

161. DMF-5005N is a 240 x 64 pixel graphic display module sold through distribution to a

very large number of customers.

162. DMF-5005NYJ-LY is a 240 x 64 pixel graphic display module sold through distribution. 

One customer, Daniel industries, used it for a fuel measurement device but it could be

used in other applications.

163. DMF-5005NY-LY is a 240 x 64 pixel graphic display module sold through distribution. 

164. DMF-50081ZNB-FW and DMF-50081ZNB-FW-12 are 320 x 240 pixel graphic display

modules sold through distribution to multiple customers.

165. DMF-50081ZNF-FW is a 320 x 240 pixel graphic display module sold through

distribution to multiple customers.

166. DMF-5010NB-FW and DMF-5010NBU-FW are 240 x 64 pixel graphic display modules

sold through distribution. One of the customers for DMF-5010NB-FW is Novometrics,

which uses them for medical monitoring equipment. The only difference between these

modules is the viewing angle.

167. DMF-50174ZNB-FW is a 320 x 240 pixel transmissive graphic display module that was

sold to Triton Systems for use in an industrial controller application as well as through

distribution.

168. DMF-50174ZNF-FW is a 320 x 240 pixel graphic display module sold primarily through

distribution.

169. DMF-50260NY-SFW is a 640 x 480 pixel graphic display module. Although one of

Optrex's customers for this module is Delphi Engineering, it is also sold by Apollo

Display, which is a distributor. Allen Houck.did not know to whom Apollo Display sold

this module and was not certain of the Delphi Engineering application. However,

according to Mr. Houck, this type of a display would be used with “microprocessor-based

products.”

170. DMF-50316NF-FW-1 is a 240 x 64 pixel graphic display module sold to Apollo

Displays, a distributor.

171. DMF-50383NF-FW is a 640 x 480 pixel graphic display module sold to several specific

customers as well as through distribution for multiple uses.
16

172. DMF-50426NYJ-SLY is a 128 x 32 pixel graphic display module sold through

distribution.

173. DMF-50773NF-FW is a 240 x 128 pixel graphic display module sold through

distribution.

174. DMF-50840NF-FW-3 is a 320 x 240 graphic display module that is imported with a

touch screen. Although it was originally developed for use in a receptionist's telephone, it

is a distribution part and could be used in other types of devices. This module is subject

to defendant's third alternative counterclaim. 

175. DMF-50840NF-FW is a 320 x 240 graphic display module sold to Space Labs, Burdick

and also through distribution to other customers. The applications for which this module

is used include electrical chemical analysis multimeters and electrocardiograph machines.

176. DMF-50840NFL-SFW is a 320 x 240 graphic display module sold to several customers

including Garmin, Techsonic, I-Con, and also sold through distribution. Although this

module is used in GPS devices, it may be used in others as well.

177. DMF-50887NCJU-FW-1 is a 256 x 64 full color graphic display module. Although it

was originally designed for an automotive message center application, it is sold to various

customers, including distributors.

178. DMF-50961NF-FW is a 640 x 480 pixel graphic display module sold through

distribution.

179. DMF-612NF-FW-9 is a 480 x 64 pixel graphic display module sold through distribution. 

Although Allen Houck testified that it is used by Amtote International, which makes

gambling totalizer machines, he stated that it is possible that it is also sold by the

distributor to other end customers.

180. DMF-660NK-EW is a 240 x 128 pixel graphic LCD display module sold to Datascope

for medical monitoring equipment and also through distribution, possibly for applications

other than medical equipment.

181. Although Optrex Part Nos. DMC-20434 and DMC-20434N-B are identified in Volume 2

of plaintiff's Exhibit 1 and Part Nos. DMC-20434HE, DMC-20481NY-LY,

DMC-20481NY-LY-B and DMF-682ANF-EW are identified in Volume 9 of Plaintiff's

Exhibit 1, Optrex had abandoned any claims with respect to these part numbers prior to

trial. 
17

182. Prior to trial, Optrex agreed to abandon its claims with respect to the following part

numbers:

C-51148NU-SLY-AA, CBL50073B-UNIT, CCT-50081UNIT-S1, CMF-51048NFJ,

COB-50796-C, COV-50739A, DMC-16105NY-LY, DMC-16106C, DMC-16117AN ,

DMC-16128NY-LY, DMC-16129, DMC-16129H, DMC-16129N-B, DMC-16129U,

DMC-16188NY-LY, DMC-16202N-LY-B, DMC-16202N-LY-D,

DMC-16202NYJ-LY-D, DMC-16202NY-LY, DMC-16202NY-LY1, DMC-16203NJ-D,

DMC-16204N-LR-B, DMC-16205NY-LY, DMC-16207, DMC-16207N,

DMC-16207N-B, DMC-16207N-EB, DMC-16230, DMC-16230H, DMC-16230N,

DMC-16230NU-EB, DMC-16230NYJ-LY-D, DMC-16230NY-LY,

DMC-16230NY-LY-B, DMC-16230NYU-LY, DMC-16433, DMC-16433H,

DMC-16433N, DMC-16433N-SEW-B, DMC-20171, DMC-20203NY-LY-B,

DMC-20215A, DMC-20261ANY-LY-B, DMC-20261NYJ-LY-D, DMC-20261NY-LY,

DMC-20434, DMC-20434HE, DMC-20434N, DMC-20434N-B,

DMC-20481NYJ-LY-D, DMC-20481NY-LY, DMC-20481NY-LY-B,

DMC-20481NY-SLY-B-5, DMC-20481NYU-LY-B, DMC-2074NY-LY-B,

DMC-40202NY-LY-B, DMC-40218N-B, DMC-40218N-SEW-B,

DMC-40267NB-LY-B-8, DMC-40267NY-LY, DMC-40267NY-SLY-B, 

DMC-40401NY-LY, DMC-40457N, DMC-40457N-SEW-B, DMC-40457NYJ-LY-D,

DMC-40457NY-LY-B, DMC-50218, DMC-50218N-B, DMC-50292NYJ-LY-D-1,

DMC-50292NY-LY-B, DMC-50448N, DMC-50454NJ-SLY, DMC-50603NY-SLY-B,

DMC-50697NFU-SLY-1, DMC-50697NFU-SLY-2, DMC-50787N, DMC-50995N-1,

DMC-51008NFJ-SLA, DMC-51099N, DMF-50248N-SEW, DMF-50375N-SFW,

DMF-50383NG-FW, DMF-50427NYJ-SLY, DMF-5064NFJ-SLY-1, DMF-50796-LAR,

DMF-50893NYJL-SLY, DMF-50980NFJL-SLY, DMF-51026NYU-LY,

DMF-51120GNFJ-AA, DMF-605NY-SEB-2, DMF-6104NB-EW, DMF-6104NB-FW,

DMF-651ANY-EB, DMF-682AN-EW, DMF-682ANF-EW, DMF-682ANY-EB,

DXC-NYU-SL, DXC-50799NYU-SLY-B, EL-161060-C, EL-16106C-C, EL-16117-C,

EL-16433-W, F-51138NF-S-AA, GMF-51094NFHU-S, HLD-6116SPC-ED,

L11-50-023, LG-50980A, LG-950980A, LGP-50980A, M-50888NF, S-12562-5M, 

TSW-50138B

183. The functions that can be performed by the end use devices for the LCDs in issue that

were identified at trial are set by the manufacturer; the user of the end use device cannot

add functions after sale.

184. A car owner would not be able to change the features of an odometer that incorporates

any of the LCDs in issue.

185. Allen Houck did not believe that any of the end use devices that incorporate the LCDs in

issue, other than computer servers, are capable of accepting new software applications

that allow the end user to manipulate data.
18

186. Other than the computer servers, the end use devices for the LCDs in issue run off

operating systems that perform the specific function for the specific device.

187. None of the following features, standing alone and in the absence of contractual

obligations, would predestine an LCD for a particular end use application: the color of the

bezel, the viewing angle, the backlight color, the impact resistance, the temperature

sensitivity.

188. All of the LCD modules in issue whose end use applications were discussed at trial, other

than those with permanently etched icons, could be used for other applications if the end

use device were designed so that the module fit in it. That is what is done by the

customers who purchase from Optrex's distributors.

189. The majority of the graphic display modules in issue are principally used for signaling.

190. When determining if an imported article is classifiable under Heading 8471, Customs

applies the legal notes and the Explanatory Notes (“ENs”) and also considers the article's

design, architecture and function. Customs only considers machines with a principal

function of processing data to be “automatic data processing machines” of Heading 8471. 

According to Customs National Import Specialist (“NIS”) Eileen Kaplan, in conformity

with the logical structure of the HTSUS, if the principal function of an article is

something other than processing data, it can not be classified in Heading 8471, even if, in

accomplishing its intended purpose, it happens to process data. Examples of provisions

that encompass articles with principal functions other than data processing but which

articles may process data in accomplishing their principal functions are the provisions

that cover line telephony apparatus, radio telephony apparatus, radio navigational

apparatus, measuring and checking apparatus, fuel pumps, cash registers, point of sale

apparatus, and copiers. Under Customs' interpretation, Note 5(a) to Chapter 84 is used to

exclude those articles that should be classified in these other provisions rather than in

Heading 8471.

191. In explaining the basis for Optrex's position that the unknown end-use devices into which

the “distribution parts” in issue satisfy Note 5(A)(a) to Chapter 84, HTSUS, Allen Houck

stated: “the way we would operate with a standard type product is, you know, if we have

a product that we know can go into certain types of products, we will sell them to

multiple customers. We will sell them through distribution. However, looking at the

interface structures, we’ve got a pretty good idea what it has to do to operate that product

and, in the vast majority of these cases, you are going to need a microprocessor system to

perform any type of practical solution to this.”

192. A microprocessor is a semiconductor chip, and a semiconductor chip is an integrated

circuit.
19

193. Microcontrollers are microprocessors.

194. The microprocessor to which the LCD display would be connected acts as a central

processing unit ("CPU") for the device incorporating the display.

195. In interpreting and applying Note 5(A)(a) to Chapter 84, Customs considers the “user” to

be the end user, i.e., the person who purchases and/or uses the device, not the

manufacturer or seller of the device.

196. Customs interprets the requirement in Note 5(A) to Chapter 84, HTSUS, that an

“automatic data processing machine” must be “capable of” “being freely programmed in

accordance with the requirements of the end user” as meaning that the design and

architecture of the device is such that it can be programmed to perform functions that

correspond to the requirements of the user for the usable life of the machine, not just at

the point of sale or distribution. The machine should be able to be programmed to do

whatever the user wants it to do, within that machine's capabilities, e.g., to do taxes, to

prepare a spreadsheet or a financial report, to play video games or to do word processing. 

The fact that an automatic data processing machine may become obsolete does not alter

its status as an ADP machine. Customs uses the phrases “capable of being freely

programmed” and “freely programmable” interchangeably. By contrast, according to the

opinion of Optrex’s witness, Allen Houck, a device would satisfy this requirement just by

having been programmed by the manufacturer, seller or distributor, even if the programs

could not be varied according to changing requirements of the end user. In addition,

Allen Houck, testified about end-use devices being “freely programmed,” the term

“freely” had no significance and he meant that the device could be “programmed.”

197. Customs classifies machines with multiple functions, one of which is data processing,

according to that machine's “principal function.”

198. With respect to the requirement in Note 5(A)(a) to Chapter 84, HTSUS, that an

“automatic data processing machine” must be “capable of” “performing arithmetical

computations specified by the user,” Customs does not look to machine functions when

referring to “arithmetical computations,” but, rather, to standard computations that the

machine's user would want to perform such as addition and subtraction. Customs would

look to see if the machine can accept applications, such as a calculating program or a tax

program, that would allow the user to perform arithmetical computations.

199. If any of these Findings of Fact are more properly denominated Conclusions of Law they

shall be deemed to be so.
20

IV

CONCLUSIONS OF LAW

1. Optrex has effectively abandoned its claims with respect to any and all part numbers

encompassed by the entries at issue for which no evidence was presented at trial.

2. At the time relevant to this action, subheading 8531.20.00 encompassed:

8531 Electric sound or visual signaling apparatus (for 

example, bells, sirens, indicator panels, burglar or fire 

alarms), other than those of heading 8512 or 8530; 

parts thereof:

8531.20.00 Indicator panels incorporating liquid crystal devices 

(LCD's) or light emitting diodes (LED's).

3. At the time relevant to this action, subheading 8537.10.90 encompassed:

8537 Boards, panels, consoles, desks, cabinets and other 

bases, equipped with two or more apparatus of heading 

8535 or 8536, for electric control or the distribution of 

electricity, including those incorporating instruments or 

apparatus of chapter 90, and numerical control apparatus, 

other than switching apparatus of heading 8517:

8537.10 For a voltage not exceeding 1,000 V:

8537.10.90 Other.

4. At the time relevant to this action, subheadings 9013.80.70 and 9013.80.90 encompassed:

9013 Liquid crystal devices not constituting articles provided 

for more specifically in other headings; lasers, other 

than laser diodes; other optical appliances and 

instruments, not specified or included elsewhere in this 

chapter; parts and accessories thereof:

9013.80 Other devices, appliances and instruments: 

9013.80.70 Flat panel displays other than for articles of heading 8528

9013.80.90 Other.
2

 Heading 8471 covers: “Automatic data processing machines and units thereof;

magnetic or optical readers, machines for transcribing data onto data media in coded form and

machines for processing such data, not elsewhere specified or included.”

21

5. At the time relevant to this action, subheading 8473.30.50, HTSUS encompassed:

8473 Parts and accessories (other than covers, carrying cases and the like) suitable for

use solely or principally with machines of headings 8469 to 8472:

8473.30 Parts and accessories of the machines of heading 8471[2]:

8473.30.50 Other.

6. According to the General Rules of Interpretation (“GRI”), HTSUS relevant to this action:

Classification of goods in the tariff schedule shall be governed by the following

principles:

1. The table of contents, alphabetical index, and titles of sections, chapters

and sub-chapters are provided for ease of reference only; for legal

purposes, classification shall be determined according to the terms of the

headings and any relative section or chapter notes and, provided such

headings or notes do not otherwise require, according to the following

provisions:

* * *

3. When, by application of rule 2(b) or for any other reason, goods are prima

facie, classifiable under two or more headings, classification shall be

effected as follows:

(a) The heading which provides the most specific description shall be

preferred to headings providing a more general description. 

However, when two or more headings each refer to part only of the

materials or substances contained in mixed or composite goods or

to part only of the items in a set put up for retail sale, those

headings are to be regarded as equally specific in relation to those

goods, even if one of them gives a more complete or precise

description of the goods.

* * *
22

7. Additional U.S. Rule of Interpretation 1(c) provides:

In the absence of special language or context which otherwise requires - -

a provision for parts of an article covers products solely or principally used as a

part of such articles but a provision for “parts” or “parts and accessories” shall not

prevail over a specific provision for such part or accessory; . . .

8. Section XVI, HTSUS, includes Chapters 84 and 85. Note 2(a) to Section XVI provides,

in relevant part:

Subject to Note 1 of this Section, Note 1 to Chapter 84 and Note 1 to Chapter 85, parts of

machines (not being parts of the articles of heading No. 84.84, 85.44, 85.46 or 85.47) are

to be classified according to the following rules:

(a) Parts which are goods included in any of the headings of Chapters 84 and 85

(other than headings Nos. 84.85 and 85.48) are in all cases to be classified in their

respective headings; . . .

9. Note 5 to Chapter 84, HTSUS, provides, in relevant part:

(A) For purposes of heading 8471, the expression “automatic data processing

machines” means:

(a) Digital machines, capable of (1) storing the processing program or

programs and at least the data immediately necessary for execution of the

program; (2) being freely programmed in accordance with the

requirements of the user; (3) performing arithmetical computations

specified by the user; and (4) executing, without human intervention, a

processing program which requires them to modify their execution, by

logical decision during the processing run;

* * *
23

10. Note 2 to Chapter 90, HTSUS, provides, in relevant part:

 2. Subject to Note 1 above, parts and accessories for machines, apparatus,

instruments or articles of this chapter are to be classified according to the

following rules:

(a) Parts and accessories which are goods included in any of the headings of

this chapter or of chapter 84, 85 or 91 (other than heading 8485, 8548 or

9033) are in all cases to be classified in their respective headings;

* * *

Pl. Ex. 6, 90-1.

11. The Explanatory Notes are the official interpretation of the scope of the Harmonized

Commodity Description and Coding System (which served as the basis of the HTSUS) as

viewed by the Customs Cooperation Council, the international organization that drafted

that international nomenclature. While the ENs “do not constitute controlling legislative

history,” they “nonetheless are intended to clarify the scope of HTSUS subheadings and

to offer guidance in interpreting its subheadings.” Mita Copystar America v. United

States, 21 F.3d 1079, 1082 (Fed. Cir. 1994).

12. The Explanatory Notes to Chapter 84, HTSUS, provide, in pertinent part:

* * *

Heading No. 84.71 does not cover machines incorporating or working in

conjunction with an automatic data processing machine and performing a specific

function. Such machines are classified in the headings appropriate to their

respective functions or, failing that, in residual headings.

Pl. Ex. 7, 1136.

13. The Explanatory Notes to Heading 8471, HTSUS, provide, in pertinent part:

(I) AUTOMATIC DATA PROCESSING MACHINES AND UNITS THEREOF

 Data processing consists in handling information of all kinds, in pre-established

logical sequences and for a specific purpose or purposes. 

 Automatic data processing machines are machines which, by logically

interrelated operations performed in accordance with pre-established instructions

(program), furnish data which can be used as such or, in some cases, serve in turn

as data for other data processing operations.
24

 This heading covers data processing machines in which the logical sequences of

the operations can be changed from one job to another, and in which the operation

can be automatic, that is to say with no manual intervention for the duration of the

task. . . .

 They may be self-contained, all the elements required for data processing being

combined in the same housing, or they may be in the form of systems consisting

of a variable number of separate units.

 Such machines are described as digital, analogue or hybrid (analogue/digital),

according to the method of processing the data.

 This heading also covers separately presented constituent units of automatic data

processing systems described above.

 However, the heading excludes machines, instruments or apparatus

incorporating or working in conjunction with an automatic data processing

machine and performing a specific function. Such machines, instruments or

apparatus are classified in the headings appropriate to their respective functions

or, failing that, in residual headings (See Part (E) of the General Explanatory Note

to this Chapter).

(A) DIGITAL MACHINES

* * *

 The digital data processing machines of this heading must be capable of

fulfilling simultaneously the conditions laid down in Note 5 (A) (a) to this

Chapter. That is to say, they must be capable of:

(1) Storing the processing program or programs and at least the data immediately

necessary for the execution of the program;

(2) Being freely programmed in accordance with the requirements of the user;

(3) Performing arithmetical computations specified by the user; and

(4) Executing, without human intervention, a processing program which requires

them to modify their execution, by logical decision during the processing run.

 Thus machines which operate only on fixed programs, that is programs which

cannot be modified by the user, are excluded even though the user may be able to

choose between a number of such fixed programs.

 Part of the data and program or programs may be temporarily stored in auxiliary

storage units such as those using magnetic discs or drums, magnetic tapes, etc. 

But these machines must have a main storage which is directly accessible for the

execution of a particular program and which has a capacity at least sufficient to

store those parts of the processing and translating programs and the data

immediately necessary for the current processing run.

 Digital data processing machines usually consist of a number of separately
25

housed interconnected units. They then form a “system”.

 A complete digital data processing system must comprise, at least:

(1) A central processing unit which generally incorporates the main storage, the

arithmetical and logical elements and the control elements; in some cases,

however, these elements may be in the form of separate units.

(2) An input unit which receives input data and converts them into signals which

can be processed by the machine.

(3) An output unit which converts the signals provided by the machine into

intelligible form (printed text, graphs, displays, etc.) or into coded data for further

use (processing, control, etc.)

* * *

 This heading also excludes:

* * *

(c) Electronic integrated circuits and microassemblies, used as central

processing units (known as “microprocessors”), memories, etc. (heading

85.42).

* * *

Pl. Ex. 7, 1297-1298, 1302.

14. The Explanatory Notes to Heading 8473, HTSUS, provide, in pertinent part:

Subject to the general provisions regarding the classification of parts (see the

General Explanatory Note to Section XVI), this heading covers parts and

accessories suitable for use solely or principally with the machines of heading

84.69, 84.70, 84.71 or 84.72.

Pl. Ex. 7, 1304.

15. The Explanatory Notes for Heading 8531, HTSUS, provide, in pertinent part:

With the exception of signalling apparatus used on cycles or motor vehicles (heading

85.12) and that for traffic controls on roads (heading 85.30), this heading covers all

electrical apparatus used for signalling purposes, whether using sound for the

transmission of the signal (bells, buzzers, hooters, etc.) or using visual indication (lamps,

flaps, illuminated numbers, etc.), and whether operated by hand (e.g. door bells) or

automatically (e.g. burglar alarms).
26

* * *

This heading includes, inter alia:

* * *

(D) Indicator panels and the like. These are used (e.g., in offices, hotels and factories)

for calling personnel, indicating where a certain person or service is required,

indicating whether a room is free or not . . .

* * *

Pl. Ex. 7, 1381.

16. The Explanatory Notes for Heading 9013, HTSUS, provide, in pertinent part:

This heading includes:

(1) Liquid crystal devices consisting of a liquid crystal layer sandwiched between

two sheets or plates of glass or plastics, whether or not fitted with electrical

connections, presented in the piece or cut to special shapes and not constituting

articles described more specifically in other headings of the Nomenclature

* * *

Pl. Ex. 7, 1478.

17. For an LCD to be a “part” of an “automatic data processing machine,” the LCD must be

dedicated for incorporation into a device that is, itself, an “automatic data processing

machine.”

18. “Automatic data processing machines” are classifiable in Heading 8471 of the HTSUS.

19. In determining whether a good is classifiable under Heading 8471, HTSUS, the classifier

must apply the Legal Notes to Section XVI and Chapter 84, HTSUS. Specifically, an

imported article cannot be classified under Heading 8471 if it does not satisfy all of the

criteria of Note 5(A)(a) to Chapter 84. The classifier may also be guided by the relevant

ENs. 

20. For most of the LCDs in issue, the basis for Optrex's claim that the LCDs in issue are

classifiable as “parts” of “automatic data processing machines” in Heading 8473 is that

each LCD has an interface that will connect the LCD to a microprocessor in an end-use

device and the microprocessor satisfies the four criteria of Note 5(a) to Chapter 84,
27

HTSUS.

21. All microprocessors process data (Tr. II 790). However, the microprocessors that

interface with the LCDs in issue and act as CPUs are not “automatic data processing

machines” under Heading 8471. Tr. II. 878-879; Pl. Ex. 7, 1302. Such microprocessors

(integrated circuits) are specifically provided for in Heading 8542, HTSUS. See EN

84.71.

22. Because the microprocessors contained in the end-use devices for the LCDs in issue are

not themselves, “automatic data processing machines,” and Optrex has provided no other

basis to find that the end use devices, other than the computer servers, are “automatic data

processing machines” of Heading 8471, none of the end use devices could be classified in

that tariff provision.

23. None of the descriptions of the specific end-use devices provided by Allen Houck

demonstrates that these devices, other than the computer servers, satisfy the criteria of

Note 5(A)(a) to Chapter 84, as explained below.

24. While there may be multiple definitions of the term “program,” (as well as the variations

“programming,” “programming,” and “programmable”), for purposes of determining

whether a particular machine satisfies Note 5(A)(a) to Chapter 84, Customs interprets that

term as referring to an “application-type” program that has been written to do a specific

function. Customs would not, for example, consider programming a video cassette

recorder to be “programming” in the Heading 8471 sense because the “program” is

“fixed” and already exists on firmware in the VCR and the user merely selects different

aspect of that program from a menu or enters data into the machine.

25. Under Customs' interpretation of the relevant ENs, a machine that is limited to a specific

function and does not handle “information of all kinds” is not an ADP machine. For

example, a business telephone is not an ADP machine because it is not used to process or

handle “information of all kinds.”

26. In accordance with the ENs to Heading 8471, machines which operate only on fixed

programs, that is programs which cannot be modified by the user, are excluded from that

heading even though the user may be able to choose between a number of such fixed

programs.

27. Application programs are not “fixed” because they can be installed or deleted from a

machine.

28. All of the end use devices identified at trial except, perhaps the computer servers, operate

on programs that are fixed by the manufacturer and cannot be changed by the user of that

device. Tr. II 672, 679. Thus, these devices would, if imported, be excluded from
28

classification in Heading 8471.

29. Customs' manner of determining the classification of articles of Heading 8471 is correct

as a matter of law and fact.

30. The requirement in Note 5(A)(a) to Chapter 84, HTSUS, that an “automatic data

processing machine” must be “capable of” “performing arithmetical computations

specified by the user” is not satisfied if the device in question only performs mathematical

calculations automatically when the user engages a particular feature of the device but

does not actually specify the arithmetical computations to be performed.

31. The Court finds that the imported articles are not parts of automatic data processing

machines because none of the identified end use devices into which the LCDs will be

incorporated satisfies the tariff definition of “automatic data processing machines” in

Note 5(A)(a) to Chapter 84. Specifically, none of these products can satisfy the

requirement that an ADP machine must be “capable of” “being freely programmed in

accordance with the requirements of the user” and, while Optrex has demonstrated that

each of the identified end use devices performs arithmetical computations in

accomplishing its principal purpose, it failed to demonstrate that any of the end use

devices other than perhaps the computer servers, are capable of performing arithmetical

computations specified by the user.

32. Even if the end use devices could satisfy the tariff definition of ADP machine, however,

Optrex's claim that all of its LCDs are “parts” of ADP machines would still fail since,

under various legal notes and Additional U.S. Rule of Interpretation 1(c), the claimed

“parts” provision (Heading 8473) cannot prevail over specific provisions such as those

for “liquid crystal devices” (Heading 9013), “control panels” (Heading 8473), or

“signaling apparatus” (Heading 8531).

33. In determining whether an article is classifiable under subheading 9013.80, which covers

liquid crystal devices, not constituting articles provided for more specifically in other

headings, Customs first looks to see if the article is more specifically described by

another provision. With respect to graphic display modules, Customs would first

consider whether the module is classifiable as an ADP display in Heading 8471 or as a

visual signaling apparatus in Heading 8531. If the article is classifiable in either of these

other headings, that is where Customs would classify it; if not, the article would be

classified in Heading 9013.

34. Customs relied on the decisions in Sharp Microelectronics Technology, Inc. v. United

States, 20 CIT 793, 932 F. Supp. 1499 (1996), aff'd, 122 F.3d 1446 (Fed. Cir.1997)

(“Sharp”) to classify LCD panels and, based on that decision, such panels would be

classified in subheading 9013.80.90, which provides for, among other things, “other”

“liquid crystal devices not constituting articles provided for more specifically in other
29

headings.” Sharp confirms Customs' position that the provision for liquid crystal devices

was more specific than a “parts” provision. Moreover, the existence of etched icons

would not alter Customs' analysis because the icons would not change the fact that the

articles are liquid crystal devices in accordance with the definition provided in the

Explanatory Notes.

35. The Optrex LCD panels are the same type of merchandise as was at issue in Sharp. 

Specifically, as in Sharp, each of Optrex's LCD panels contain two rectangular ultra flat

glass substrates; the interior of the glass between the substrates is filled with liquid

crystals, the glass substrates have inner surfaces that have been coated with indium tin

oxide and etched, the interior of each glass substrate is covered with a processed

alignment layer which causes the liquid crystal molecules to align in a fixed direction, the

substrates are hermetically sealed together and, for many of the panels, when the glass

substrates are joined, the electrodes are perpendicular to each other, creating a matrix.

36. As here, the plaintiff in Sharp claimed that its LCD panels were classifiable as “parts of

ADP machines” of Heading 8473 rather than as “liquid crystal devices not constituting

articles provided for more specifically in other headings” in Heading 9013.

37. In Sharp, the court stated:

When determining relative specificity, the court looks at the provision with

“requirements which are more difficult to satisfy and which describe the article

with the greatest degree of accuracy and certainty.” . . . As added guidance,

additional U.S. Rule of Interpretation 1(c) provides that “a provision for ‘parts and

accessories’ shall not prevail over a specific provision for such part or accessory.” 

The court finds that Heading 9013 contains a specific provision for liquid crystal

devices and thus is more specific than the part provision under Heading 8473. 

932 F. Supp. at 1507 (citation omitted).

38. The Court of Appeals for the Federal Circuit affirmed this court's relative specificity

analysis in Sharp, which concluded that the claimed parts provision was less specific than

Heading 9013. 

39. With respect to the Optrex LCDs that are “glass panels” and not “modules,” the Sharp

case is directly on point because Optrex's complaint claims only that the glass panels (and

all of the other articles in issue) are classifiable as “parts” of ADP machines, the same

claim discussed at length in both Sharp decisions.

40. Because, under Sharp, basic LCD glass panels are classifiable under Heading 9013, the

imported articles identified by Allen Houck as LCD panels are classifiable in that

heading. Moreover, because they do not fall within any of the more specifically
30

descriptive subheadings (e.g., periscopes, lasers) and are not sufficiently advanced to

constitute “flat panel displays,” “magnifiers” or “door viewers,” they are properly

classifiable as “other” “Other devices, appliances and instruments” in subheading

9013.80.90, HTSUS.

41. In order for an LCD module to be eligible for classification as an indicator panel

incorporating a liquid crystal device under subheading 8531.20.00, HTSUS, Customs has

consistently taken the position that the module must belong to a class or kind or

merchandise that is principally used and/or limited by design to signaling.

42. To be classifiable as an indicator panel incorporating a liquid crystal device under

subheading 8531.20.00, HTSUS, the articles must belong to the class or kind of

merchandise that is principally used to display limited information that is easily

understood by the person viewing it. 

43. With respect to the classification of character display modules, Customs has developed a

guideline for determining if a character display module is principally used for signaling. 

In accordance with this guideline, which has been dubbed the “80 character rule,” if a

character display module can display no more than 80 characters, then, in the absence of

any information to the contrary, it is deemed to belong to the class or kind of merchandise

that is principally used for signaling. 

44. The “80 character rule” is entitled to some deference as reasonable under Skidmore v.

Swift & Co., 323 U.S. 134 (1944), since it has been consistently applied since the early

1990s and provides rational and useful guidance in determining whether a particular LCD

module is classifiable in Heading 8531 or in, for example, Heading 9013, which, at the

time of the entries in issue, carried a higher duty rate. 

45. Customs' position with respect to the characteristics of articles classifiable in Heading

8531 is in harmony with the examples in the ENs to Heading 8531, which states, in

pertinent part:

With the exception of signaling apparatus used on cycles or motor vehicles . . .

and that for traffic controls on roads . . ., this heading covers all electrical

apparatus used for signaling purposes, whether using sound for the transmission

of the signal (bells, buzzers, hooters, etc.) or using visual indication (lamps, flaps,

illuminated numbers, etc.), and whether operated by hand (e.g. door bells) or

automatically (e.g. burglar alarms).

This heading includes, inter alia:

* * *
3

 E.M. Chemicals was decided under the Tariff Schedules of the United States (“TSUS”)

which, unlike the HTSUS, had no express provision for liquid crystal displays such as Heading

9013, and the issue in that case was whether imported liquid crystals were classifiable as “parts

of indicator panels” or as a chemical mixture. Thus, although the definition of “indicator panel”

applied in that case is useful, the Court of Appeals determined, in effect, that all LCDs that were

not incorporated within specific end-use products such as “watches, clock radios, calculators,

computers, gas pumps, meters, various medical and scientific instrumentation, toys, and

automobile dashboards” (920 F.2d at 911) at the time of importation were “indicator panels.” In

enacting the HTSUS, which does contain a specific provision for liquid crystal displays,

Congress recognized that such articles are not all used as indicator panels.

31

46. Customs’ position with respect to the characteristics of articles classifiable in Heading

8531 also comports with the court's interpretation of the term “indicator panel” in E.M.

Chemicals v. United States, 920 F.2d 910, 913 (Fed Cir. 1990):3

. . . an indicator panel is properly classified under Item 685.70 if it merely conveys

information. A & A Int'l, Inc. v. United States, 5 CIT 183, 187-89 (1983). We

agree with this interpretation of Item 685.70. An LCD, as a signaling device or an

indicator panel, may simply convey information or notify the user of a specific

event. An LCD may operate in this manner in normal or abnormal circumstances. 

. . The terms “indicator panels” or “signaling devices” simply denote objects that

“indicate” or “signal” . . . We therefore hold, as a matter of law, that the language

“indicator panels ... [or] other ... visual signaling apparatus,” in Item 685.70,

includes devices that signal or indicate generally . . . 

47. Optrex has failed to demonstrate that Customs’ position with respect to the characteristics

of articles classifiable in Heading 8531 is incorrect.
32

48. With respect to part numbers DMF-50073NF-FW and DMF-50840NF-FW-3, which are

graphic display modules that are imported with touch screens attached, because these

“touch screen” modules possess the characteristics of control panels of Heading 8537,

defendant's third alternative counterclaim is granted.

49. If any of these Conclusions of Law are more properly denominated Findings of Fact they

shall be deemed to be so.

Dated this _27_ day of February, 2006.

_/s/ Evan J. Wallach____

Evan J. Wallach, Judge

United States Court of International Trade